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Occasional poster

Joined: 21 May 2007
Posts: 38

PostPosted: Sat Jun 06, 2009 12:37 pm Reply with quoteBack to top

Hi Friends & Entrepreneurs,

( Very Good one which I wanna share with my community people )

Have you ever wondered why some entrepreneurs go on to become inspiring success stories and why some disappear from the scene without a whimper? There are also instances where certain companies that were doing rather well got into trouble a few years down the line.

What mistakes entrepreneurs need to avoid in order to emerge winners and came out with 12 classic mistakes that people do and 12 ways to avoid them too.

1. Numbers and numbers:
People tend to overlook the most important fact that a business has to make money. Most entrepreneurs make the mistake of getting lost in the turnover and do not think about the profit. However the fact remains that turnover is only revenue and profit is what you are left with after taking operational costs out from the revenue.

Mantra of success: Keep an eye on your bottomline. If you are not making profit, no matter how much you love your business shut it down.

2. All passion, no substance: When the passion takes over and logic is compromised then there is trouble. Rather than concentrating on making money a lot of entrepreneurs who let passion carry them away lose sight of the milestones of success profit, customers, revenue and growth.

Mantra of success: Entrepreneurs have to keep a distance from their passion by putting into the business very strong logical and quantitative targets in measuring the success.

3. Shoestring: Many entrepreneurs go into a business with assumptions that are not based on facts and market research. They make an assumption that their business will become profitable in the next six months and get cash that is enough to see them through the next six months. Unfortunately, that assumption is almost always wrong. In most cases they have underestimated the time when they will start making money by half. And if they have started on a shoestring budget with no reserves for the future then their business collapses. Entrepreneurs need to keep in mind that there are many factors that are not in their control. For example, orders might be slow in coming, people might be slow to pay when you invoice them or you may have a problem in delivering the product.

Mantra of success: Have an adequate cash flow and overestimate the time it takes to break even or make money. Do not go by your assumptions, base them on hard facts.

4. It's my party: Many entrepreneurs run their business like a personal fiefdom and do whatever they want. They have no time or patience for formal procedures, policies and corporate governance, which give them transparency on how the business is run.

Mantra of success: Entrepreneurs need to have strict control and policies on how money is spent and there should be operational checks and balances between the head of the company and the finance controller. Allow people to see how the business is run because you have to have regard for your clients.

5. Control freak: Many a times people who are running a business want to have a say in everything from a million dirham deals to the colour of the coffee table and do not trust others in their organisation. In doing so they are wasting valuable time on issues that do not add value to their company.

Mantra of success:
You should focus on the core issues and get the right people in the right place. You also have to get your priorities clear and prioritise your time.

6. Yes boss: Many entrepreneurs have a habit of employing people who are "yes" men. They employ people because they will flatter them and not disagree with them because they hate criticism. It is a simple ego issue and the more yes men they employ, the more trouble their business is in because these people are afraid to point out the mistakes and tell them truthfully what is required to run the business properly.

Mantra of success: Businessmen need to employ people who are better than them in areas that are not their area of expertise. Do not be scared to do so because at the end of the day you want your business to be a success. If collectively all the employees do the best in what they are supposed to do then your company gains and is successful. Also, give the people the responsibility and the authority to run their sections and take decisions.

7. Head in the clouds: Although it is a good thing to be optimistic, you have to be realistic and see things as they are. It is not a good thing to be overly optimistic as one needs to be realistic and practical in order to run a business successfully. Trouble starts when overly optimistic entrepreneurs do not accept defeat and remain in the clouds thinking that there is no defeat and failure in their world. Even if their business is not doing well they keep on thinking that all is going to be okay and will get better. When there are issues and problems that have to be dealt with properly.

Mantra of success:
First of all inject yourself with some reality and when you realise that your business is in trouble then do not ignore it and seek professional help to get rid of the problems that are plaguing your business whether it is financial or technical.

8. The idea man: Many a times people with great ideas get into business but lack the business acumen or skills needed to run that business. They are inventors and innovators but not businessmen. And everyone knows that an idea is not enough to run a business, you have to have the ability to turn ideas into business for profit.

Mantra of success: Adjust and know your weaknesses and find a partner with the skills that are needed to run a business.

9. Detail does not matter: In business as in life, the devil is in the detail. For lots of businessmen detail is not important. It can be financial detail, technical detail or anything else. These people get bored with the details. For example their finance department tells them that there is trouble on the horizon and they just tell them to deal with it, instead of going into the details of what is causing the problem and addressing the issues at hand. However, later they learn the hard way that detail is important.

Mantra of success: Detail is important so make time for detail. You also have to recognise that you have a weakness in a certain area of the business and seek training and help in getting to realise why that detail is important.

10. Out of focus: A good businessman needs to have tunnel vision and be absolutely focused on the main objective that is to make money. Nothing should distract them. These distractions can be other business ideas, emotional issues or their ego. When they lose sight of the main objective of making money then their business starts to wobble.

Mantra of success: You must have the discipline, determination and the conviction to carry the idea through. Nothing should put you off your course.

11. Stab in the back: Many a time people team up with a partner, give them absolute trust and responsibility. And when the business is a success the partner pushes them out of the business and they are powerless and penniless. This happens a lot, especially in family businesses.

Mantra of success: Every role and responsibility should be legally documented and the authority of financial expenditure should never be given to one individual. You and your partner should both be involved in the financial decisions and approvals. Also the legal agreements should contain exit routes for each party.

12. Golden goose disappears: Many times businesses depend heavily on one big client who provides 80 per cent of their turnover. The businessman running the show builds and bases the business around this one client. But they fail to recognise that there are things that are not in your control and you might lose the client one day.

Mantra of success: No matter, how comforting it is to look after this one customer do not allow 80 per cent of your revenue to come from one client. Simply put, do not put all your eggs in one basket.

Arun Kumar R

PO Box 232952,
GF-9, Al-Owais Bldg,
Port Saeed, Diera,
Dubai, UAE
00971 50 8462234,
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